Topics of Innovation Management

Welcome to the research page of Innovative Dutch.

About Innovative Dutch

Innovative Dutch is specialized in understanding and simulating the Innovation Ecosystems or certain aspects of it, such as the Startup Ecosystem, Incubation, Corporate Venturing, Innovation Policy and Innovation Management.

Innovative Dutch creates strategy simulation games in which the players have to start their own Startup, be an Innovation Manager in a large company or act as Minister of Economic Affairs in their country. Innovative Dutch targets everybody willing to learn about these topics: higher education institutes, governmental learning programs and corporate training.

Innovative Dutch also offer services related to understanding the Innovation Ecosystem and creating projects, programs or systems that are part of this complex environment, such as public-private initiatives, research programs, educational programs and curricula.

What we see is that there is no standard for the innovation process. But most of the literature suggests at least three items to be part of every innovation process:

Idea Generation

Concept Development

Commercialisation

Open Innovation

Over the last decade, companies have started to look for other ways to increase the efficiency and effectiveness of their innovation processes. For instance through active search for new technologies and ideas outside of the firm, but also through cooperation with suppliers and competitors, in order to create customer value. Another important aspect is the further development or out-licensing of ideas and technologies that do not fit the strategy of the company. Consider, for example, ASML, which is a Philips spin-off.

Open Innovation can thus be described as:

combining internal and external ideas as well as internal and external paths to market to advance the development of new technologies.

Figure 2 Open innovation

What does this mean?

In the first place, the shift described above means that companies have to become aware of the increasingly importance of open innovation. Not all good ideas are developed within the own company, and not all ideas should necessarily be further developed within the own firm’s boundaries. The table below further illustrates this:

Closed Innovation Principles

Open Innovation Principles

The smart people in the field work for us.

If we create the most and the best ideas in the industry, we will win.

To profit from R&D, we must discover it, develop it, and ship it ourselves.

External R&D can create significant value: internal R&D is needed to claim some portion of that value.

If we discover it ourselves, we will get it to the market first.

We don’t have to originate the research to profit from it.

The company that gets an innovation to the market first will win.

Building a better business model is better than getting to the market first.

If we create the most and the best ideas in the industry, we will win.

If we make the best use of internal and external ideas, we will win.

If we create the most and the best ideas in the industry, we will win.

We should profit from others’ use of our IP, and we should buy others’ IP whenever it advances our business model.

This means that within the company a shift should take place in the way people look at the company and its environment. Involving other parties when developing new products and technologies can be of great added value. Think for instance about cooperation with other firms in your sector, suppliers, universities, and of course end-users.

Co-Creation

Co-Creation is a widely used term that litteraly means “to create together”. The definition doesn’t decide if we’re talking about consumers, clients, suppliers or competitors. That’s why this terminology is being used as an umbrella for all kinds of collaborative creation. When we start googling on co-creation we’ll find the same amount of widespread definitions: link, link, link and link. When Prahalad first came up with co-creation, he meant is slightly different:

In recent years, co-creation has oftenly been linked to Open Innovation. Marcel Bogers on this subject:

Crowdsourcing

Crowdsourcing “refers to companies seeking solutions from outside the company, for example by putting out a call for ideas, solutions or input.” (Pointer, 2010). See this presentation for more information (partly in Dutch).

Entrepreneurship

During the last two decades, the landscape for entrepreneurism has changed rapidly. Important trends are the transition from domestic and static economies towards global and dynamic economies, from homogenous, experienced and permanent workforces towards diverse, educated and flexible workforces, from the use routine technologies and mass production towards complex and knowledge-driven technologies and customization and from bureaucratic, efficiency-driven organizations towards organic and innovation-driven organizations (Greiner, 2004).

The implications of these trends on entrepreneurism have been widely researched. One of the classics in organization theory which debates the role of entrepreneurism is Greiner’s “Evolution and Revolution as Organizations Grow”. The model elaborates on the “Five Phases of Growth” in which organization growth is considered as a life cycle: growth through creativity, direction, delegation, coordination and collaboration.

Financing Innovation

There are two ways of financing innovation, that’s from a capital investment point of view and from an innovation process point of view.

Capital Investment

Financing Innovation Processes

During each of the steps in the innovation process, the possible outcome can be calculated, a kind of Net Present Value-calculation. It basically follow this line:

For instance, when you currently have a project in the ideation phase, which has the possibility of becoming a small product in a niche area (let’s say 5000 sales in a lifecycle), and a value of €10000, but a chance Q1 = 50% of getting through through the proof of concept phase, a chance of 10% of getting through safety regulations (Q2) and a chance of 30% of being accepted by the consumers, than your NPV will be 5000 * 10000 * 0,5 * 0,1 * 0,3 = €750.000, than the costs of innovation should be lower than €750.000. If the (expected) costs will be higher, it is not wise to continue financing this project.

Radical and Disruptive Innovation

Radical and disruptive innovations are new products or services that contribute to new markets. This will be more clear when showing the following picture:

There is a lot of debate about the difference between the two types, but they both refer to the ‘diversification’-oriented strategy. The Gartner Hype Cycle shows us an annual overview of possible radical/disruptive innovations:

Marketing Innovation

Innovation is not only about technological innovation, but also about bringing products to the market. Marketing therefore is continuing to be an important aspect in innovation management. So how did Marketing develop over the years?

And as Philip Kotler explains in this slide:

Business Model Innovation

To understand Business Model Innovation, one needs to understand Business Models first.

“There was a time, not so long ago, when ‘‘innovation’’ meant that companies needed to invest in extensive internal research laboratories, hire the most brilliant people they could find, and then wait patiently for novel products to emerge. Not anymore. The costs of creating, developing, and then shipping these novel products have risen tremendously (think of the cost of developing a new drug, or building a new semiconductor fabrication facility, or launching a new product into a crowded distribution channel). Worse, shortening product lives mean that even great technologies no longer can be relied upon to earn a satisfactory profit before they become commoditized. Today, innovation must include business models, rather than just technology and R&D.”

Source: Chesbrough (20o7): Business Model Innovation: it’s not just about technology anymore

Branding

Branding is something totally different. Often refered to as part of the P for Promotion (see Marketing Innovation), Branding for many companies is much more a strategic issue. The American Marketing Associations defines a brand as “a name, term, sign, symbol or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of other sellers.”

Ideation

Ideation is part of the problem finding phase of innovation processes. It’s insourcing ideas and opportunities inside your funnel and translating them into possibilities. Ideation comes with many different techniques, such as:

Brainstorming

Mindmapping

TRIZ

Brainwriting

Six Thinking Hats

Research

Imagination

Social Innovation

It is very difficult to define the exact meaning of “social innovation”. For instance, the Stanford Social Innovation Journal, one of the earliest scientific journals on social innovation, refers to it as “social entreprises” and “social entrepreneurship”. That is:

Specifically, we define social innovations as new ideas (products,
services and models) that simultaneously meet social needs (more effectively
than alternatives) and create new social relationships or collaborations. In
other words they are innovations that are not only good for society but also
enhance society’s capacity to act.

However, that’s not what we mean here. Recent studies (e.g. American Economic Review) show an extra dimenion, namely:

As it is used now in public and scientific
debates, it is about developing innovative solutions and new forms of
organisation and interactions to tackle social issues.

So, it’s not only about the goals, but also about the means. This is reflected by the following infographic from the Social Innovation Framework: